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13 September, 07:59

A proposed new investment has projected sales of $592,000. Variable costs are 41 percent of sales, and fixed costs are $135,000; depreciation is $53,000. Prepare a pro forma income statement assuming a tax rate of 22 percent. What is the projected net income?

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  1. 13 September, 08:05
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    The projected net income is $ 125,798.40

    Explanation:

    Income statement for the proposed investment:

    Projected sales $592,000

    less costs:

    Variable costs (41%*$592,000) ($242,720)

    fixed costs ($135,000)

    depreciation ($53,000)

    profit before tax $161,280

    Tax at 22% (22%*$161,280) (35,481.60)

    net income $125,798.40

    The variable costs as the name indicates is dependent on the sales made since variable costs are expected to move in line with sales revenue recorded.
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Home » Business » A proposed new investment has projected sales of $592,000. Variable costs are 41 percent of sales, and fixed costs are $135,000; depreciation is $53,000. Prepare a pro forma income statement assuming a tax rate of 22 percent.
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